We performed LEED, TDMS and molecular beam measurements on the adsorption system NO/stepped Pd(111) down to 160 K. The initial sticking coefficient is found to be unity independent of temperature, and the adsorption kinetic is dominated by a precursor state. The saturation coverage at temperatures below 200 K is one monolayer, which is correlated with a sharp (2 × 2) LEED pattern. At temperatures above 400 K, a small amount of the adsorbed NO molecules dissociates, which occurs at structural defects, i.e. at steps, only. Besides NO the only desorbing species are N 2 and N 2O. The dissociation capability of the surface is extremely sensitive to adsorbed oxygen, which blocks the step sites. From thermal desorption measurements we could determine the fraction of NO molecules that dissociate as a function of the applied heating rate; this allowed an estimate of the kinetic parameters. The activation energy for dissociation was thus found to be 1.2 eV with a pre-exponential of 4 × 10 11 s −1. Since dissociation could be suppressed using a small pre-coverage of oxygen in thermal desorption experiments with NO we were able to determine the desorption kinetics from an evaluation of the desorption spectra via isothermic and isosteric desorption rates: in the low coverage limit the activation energy for desorption is 1.52 eV with a pre-exponential of 2.6 × 10 14 s −1. The variation of the desorption energy with coverage indicates the operation of strong lateral interactions between the adsorbed NO molecules.